Adding up the true cost of university

Higher tuition fees have made students increasingly determined to get the most
out of university, and be aware of expensive extras, says Jessica Moore.

Cost of university: fashion students will find that they must fork out for fabrics, sketchbooks and zips galore.Photo: Alamy

By Jessica Moore

2:48PM GMT 28 Feb 2013

The financial future faced by today’s university students is not a comforting one. Those who started their degree last autumn will graduate with an average debt of £53,330, according to a study by insurance company LV=.

However, according to a poll conducted in September by YouthSight, undergraduate priorities have changed — 93 per cent of these new students would prioritise paying a utility, credit card or rent bill, or making an overdraft payment, above a good night out. It’s a statement that will make anyone who started university before 1998, when the idea of paying for a degree in the UK was unheard of, rub their eyes in disbelief. But this is the new reality. The students of today and tomorrow might play hard, but they work and budget harder, too.

The good news is that students seem to be making the right compromises: sticking to their guns on their course choice, carefully researching institutions to find those that offer the best support and prospects, and working hard to make the financial outlay worthwhile. The cutback, it seems, is in socialising.

“I’ve always wanted to go to university, so the higher fees didn’t change my mind,” says Lauren Steel, a first-year fashion student at the University of Northampton. “But I think students this year are more careful with their money. We think hard about where we socialise, making sure we find the places that have the best offers, where drinks might be cheaper or entry is free.”

Those planning to start university need to go in with their eyes open, and that means considering their day-to-day expenses, such as rent, food and the odd night out, but also being aware of any “hidden” costs associated with their course. While many students can get through three years with little more than a laptop and some second-hand books, budding Stella McCartneys such as Steel will find that they must fork out for fabrics, sketchbooks and zips galore. Aspiring photographers need camera equipment. Artists need paint. Longer courses, ones that include time spent abroad, and those that may necessitate further study, such as law, can also be more costly than most.

Steel was aware she had chosen a relatively expensive course, so before applying to university she researched her options carefully and shopped around. “At Northampton they provide freshers with a starter pack, which includes the basics to get fashion students through their first year,” she says. “It makes all the difference as it means you’re set up and ready to go, and that also helps you settle in.”

James Green, a first-year product design student at Nottingham Trent University, is impressed by his university’s response to student hardship. “Last term, every first-year student on my course was given £100 to help with materials costs. The other universities I applied to didn’t offer that,” says Green. He also researched what the different universities could offer him in the long-term. “Nottingham Trent focuses on getting internship placements for students, and the industry in my sector is based in this region. Those things should make me a lot more employable.”

Consider income, too. Most undergraduates are entitled to both a tuition fee loan and a maintenance loan to cover living expenses. The fees loan is paid directly to the university or college, while the maintenance loan goes to the student. Both are only repaid after a student graduates and is earning above a specific threshold, and the payments are at an affordable rate (see studentfinance.direct.gov.uk for more information).

“If you are thinking of going to university, it is vital to ensure that you have access to adequate financial support while studying,” says Nichola Malton, assessment manager at the Student Loans Company (slc.co.uk), the government organisation that provides loans and grants to students.

She adds: “When the time comes for you to apply to university, we would advise you to keep checking the online resources, which will have the latest updates on financial products and support that might be available to you.”

These resources include the Student Finance England Facebook page and Twitter feed. The Student Calculator (studentcalculator.org.uk) will give you an idea of the income you might be entitled to and help you build your budget.

“There are grants and scholarships in Northampton, both within and outside the university,” says Lauren Steel. “The support available really influenced my choice of uni.”

Must student life be about penny-pinching, though? Not for Victoria Toy, a first-year history student at Aberystwyth University. “Student Finance Wales covers a large amount of my fees, so although they are now around £9,000 a year, I only have to repay around £3,500 a year, and I have a loan to cover that until I graduate,” explains Toy. “For students from Wales, the fees aren’t really any different this year.”

Yet she feels money is more of an issue for her than it was for previous undergraduates, partly because of the wider economic context, and partly due to a cultural change.

“For students now, it’s about getting the grades and being 100 per cent focused from the start,” says Toy, who has a part-time job at the university and lives with her parents, rather than in halls. “We’ve changed our perspective. Going to university isn’t all about the experience any more.”

Steel concludes: “By doing my course, I’m gaining lots of plus points. If graduate debt is the one negative, that doesn’t seem like such a bad deal in the greater scheme of things.”

When debt is the best option

Should parents pay their children’s tuition fees upfront? Counter-intuitive as it seems, this is rarely advisable.

University fees of up to £9,000 a year are covered by a government loan, which graduates start to repay from the first April after they leave uni — but only if earning above a certain threshold. Those who started university in 2012, for example, will start repaying their loan once they earn more than £21,000, at 9 per cent of pre-tax earnings over that amount. So, on a £26,000 salary, the repayments would be 9 per cent of £5,000: £37.50 a month. If the salary goes up or down, so will the repayments.

As loans go, this is a great one. The interest rate is lower than those offered by banks, and it will not show on a credit check, so won’t affect a young person’s chances of borrowing in future.

Many parents are concerned about their child starting working life in debt. But think long-term. Could the money that might pay the tuition fees be better invested elsewhere? Putting it in a high-interest account is likely to be more profitable than clearing the debt — and will make a useful graduation present.